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NPS Withdrawal

NPS subscriber has various withdrawal options.

The NPS subscriber can exercise a number of options at time of withdrawal.

Withdrawal from Tier I Account at retirement

Subscriber can withdraw from their NPS Tier I account on the date of retirement (for corporate subscribers) or 60 years for (UOS subscribers). Following are the rules for withdrawal:

  • Atleast 40% of the fund value (corpus) in NPS Tier I account on the date of retirement must be mandatorily utilised to purchase an annuity. The amount utilised for purchase of annuity is fully exempted from tax.
  • The subscribers have an option to defer the purchase of an annuity for a period of three years.
  • The Subscribers can withdraw upto 60% of the corpus as lumpsum. The lumpsum withdrawal amount is exempted from tax.
  • The subscriber can defer the withdrawal of the lumpsum amount and continue to stay invested in NPS upto 70 years or 10 years from date of retirement whichever is earlier.
  • The subscriber is also permitted to withdraw lumpsum in 10 instalments. The annuity must be purchased before opting for phased withdrawal.
  • If the corpus in the subscriber’s account is equal to or less than Rupees Two Lakh, subscriber can withdraw the full amount.

Premature exit from Tier I Account

Subscribers can opt to exit from their NPS account before retirement subject to following conditions:

  • Premature exit is permitted only after 10 years of participation from the date of opening the account.
  • subscribers can withdraw 20% of the corpus in lumpsum, and the remaining 80% must be used to purchase annuity.

Partial Withdrawal from NPS Tier I Account

The subscribers can withdraw a partial amount from NPS account subject to following rules:

  • The maximum amount of withdraw cannot exceed 25% of value of subscriber contribution.
  • The subscribers are eligible for partial withdrawal only after three years of participation in NPS from the date of opening the account.
  • The subscriber is entitled to partial withdrawals to a maximum of three times during the tenure of NPS account.
  • Partial withdrawal is permitted for specific purposes. Among these are included
    • Higher education
    • Marriage of children
    • Purchase/construction of residential houses, etc.
    • Medical expense
    • Expense toward establishment of own business venture, etc.

Withdrawal for Tier II Account

For Tier II account holder withdrawals are permitted anytime

Upon the death of the subscriber

In the unfortunate event of the death of the NPS subscriber. The entire outstanding corpus in the subscriber’s account will be paid to the nominee. The corpus received by the nominee is fully exempted from tax.

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